I am an Associate Professor in the School of Accountancy and MIS at DePaul University in Chicago, IL. My passion is white-collar crime. My research has been published in such journals as Behavioral Research in Accounting, Auditing: A Journal of Practice and Theory, Journal of Business Ethics, The CPA Journal and Journal of Accountancy. I am also the founder of Helios Digital Learning, Inc., an education media company that offers a suite of educational, consulting and training products and services designed to help organizations understand, identify and prevent fraud. My first white-collar crime documentary, Crossing the Line: Ordinary People Committing Extraordinary Crime, was a 2012 recipient of the American Accounting Association Ethics Committee’s Teaching Award and a recipient of the 2012 Mark Chain/FSA Teaching Innovation Award sponsored by the AICPA. In my free time, I enjoy doing crossfit and half-marathons.

The Miseducation of Apollo Nida

Here we go again…another Real Housewives franchise reality star charged with fraud. In my last post Teresa, Orange Could Be Your New Black, I described the financial woes of New Jersey Real Housewives star Teresa Giudice. As we await the outcome of the Giudice case, this past Friday we were greeted with the news of the arrest of Apollo Nida, husband of Atlanta Real HousewivesPhaedra Parks. Nida is facing some serious charges, given that he has already done a 5-year stint in federal prison for breaking federal racketeering laws. One can only speculate how these new charges will impact Nida’s future.

I teach forensic accounting and conduct research in white-collar crime, so I was naturally curious about this case.

Nida’s case is a classic fraud scheme (and yes, we will be discussing this in my graduate forensic accounting class this week). According to a written affidavit by U.S. Secret Service Agent Alexandre Herrera, Nida is charged with creating fake companies allowing him access to LexisNexis and Equifax commercial databases which he allegedly used to hunt down future victims of his fraud schemes. Ironically, I just reviewed a Nida-like fraud concept in my graduate course last week, so this bad househusband behavior could not be more timely.

Allow me to give you some background on the fraud concept. Nida created a shell company which is a type of billing scheme. Other billing schemes include:

1.) having a non-accomplice vendor and,

2.) making personal purchases.

According to the 2012 ACFE Report to the Nations, billing schemes accounted for 26.1% of fraud schemes committed in the United States, so Apollo, you are not alone. As a comparison, billing schemes only accounted for 14.7% of the reported cases in Asia according to the same report.

Typically, a person creates a shell company for the sole purpose of committing fraud. Establishing a shell company may sound complicated, but in reality, it’s easier than you think. When forming a shell company, a certificate of incorporation or assumed-name certificate is set up. A shell company can also be formed in someone else’s name. When I was conducting forensic interviews for my first documentary, Crossing the Line: Ordinary People Committing Extraordinary Crimes, I interviewed Diann Cattani who described how she set up a shell company in the name of “Diann Cattani, Inc.” so using your own name to defraud is not unheard of. But the most common way to set up a shell company is using a fictitious name like Nida did to prevent or prolong detection. After the company is created, the shell company’s address often takes the form of a home address, post office box or a friend/relative’s address. A bank account is then established in the name of the fictitious company in order to make a home for the phony transactions.

The Nida investigation began when Herrera was examining alleged fraud activities of Gayla St. Julien, Nida’s alleged accomplice. As I tell my students, having an accomplice (also known as collusion) often makes fraud more difficult to detect. According to the criminal complaint, St. Julien would deposit fraudulent checks, stolen U.S. Treasury checks, stolen retirement checks issued to Delta Airlines employees, and checks in the names of real people that were owed unclaimed property from various state and federal government agencies. This is a pretty elaborate billing scheme requiring the need of an accomplice. In St. Julien’s case, she was considered Nida’s “right-hand” in the scheme by opening 40 bank accounts under stolen identities to commit bank and check fraud totaling approximately $3 million.

As an educator, it is perfect when you can take a real-world case like the Nida case and dissect it and apply theories in order to teach your students. This teaching and training approach is not new for me. My second in-progress documentary, All the Queen’s Horses, uses the Dixon, IL $53 million fraud case as a teaching tool to educate students and professionals about the importance of preventing municipal fraud. The Dixon fraud, similar to Nida’s case, was discovered by an employee tip. Consistent with fraud research, 42.1% of frauds discovered in 2012 were by tips (see 2012 ACFE Report to the Nation). When St. Julien was arrested on September 11, 2013 it wasn’t long before she implicated Nida as the mastermind behind the fraud schemes. Bearing a name like “Apollo” are we surprised?

For business owners, if you’re worried about these types of schemes happening to you, there are ways to detect them. The following steps could save you and your company some losses. You can:

Maintain and regularly update an approved vendor list

Independently verify all vendors before payment

Identifying shell company invoices by looking for:

Lack of detail on the fraudulent invoice

Invoice that lacks detailed descriptions of the items billed

Mailing address may be an indicator of fraud (post office boxes can often be a clue)

For individuals, if you are worried about identity theft the best piece of advice I can offer is prayer. Can we ever be safe from the Nida’s of the world when large organizations such as Target and Neiman Marcus are grappling with security breaches of consumer information? The Bureau of Justice Statistics reports that identity theft cost Americans $24.7 billion in 2012 while losses for household burglary, motor vehicle theft and property theft totaled approximately $14 billion.

Other interesting facts from Bureau of Justice Statistics report include:

85% of theft incidents involved the fraudulent use of existing accounts, rather than the use of somebody’s name to open a new account.

People whose names were used to open new accounts were more likely to experience financial hardship, emotional distress, and even problems with their relationships, than people whose existing accounts were manipulated.

Half of identity theft victims lost $100 or more.

Americans who were in households making $75,000 or more were more likely to experience identity theft than lower-income households.

Prayer appears to be our only option!

When the Real Housewives of Atlanta added Ms. Parks to the show in 2010, I remember sending an email to her requesting an interview with Nida. I was fascinated by his first fraud case and how he transitioned back into society and landed on a television show. I wanted to ask Nida about his experiences in federal prison and his rationalization to commit auto title fraud. I never received a response from Ms. Parks (or Nida for that matter) but now I have a new laundry list of questions. My first question would be “why?”. Why did Nida feel the need to engage in this same behavior again? For starters, Ms. Parks and Nida make a reportedly $300,000 and $50,000-$75,000 respectively per season with a combined family net worth of $2 million. I really wonder if they needed the money. Or is it something about the limelight of reality tv stardom that causes the Giudices and Nidas of the world to engage in fraud. Who knows the answer to this question, but bravo to Bravo for showing us these “real” fraud cases.

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